Shares in fashion retailer H&M fell 10.6 percent after fourth-quarter profit and profit margins fell and the company said it would open far fewer stores in 2018.

It was another dark day for struggling UK outsourcer Capita , and a pay day for short-sellers, with the shares down 47 percent after the company warned on profit, announced a rights issue and suspended its dividend.

Yet investors remained optimistic on European equities in general.

"It has been a very strong start to the year, and with that, markets can always take a pause, but there is nothing from the earnings season so far that would not support a continued constructive view on the market," said Britta Weidenbach, head of European equities at Deutsche Asset Management.

Year to date in 2018, European equity funds have registered the strongest inflows across all major regions, drawing in more than $22 billion, HSBC found. Last year Europe accounted for more than a third of global equity fund flows.

There were some bright spots among companies reporting on Wednesday.

Electrolux rose 6.9 percent after the home appliance maker reported a bigger than expected rise in fourth-quarter profit, while Finland's Elisa gained 5.8 percent after its results beat expectations.

An order boom helped truckmaker Volvo to raise its outlook, driving the shares up 0.4 percent.

In an early sign of the negative impact forex could have on some European businesses, Infineon shares fell 1 percent after the chipmaker cut its revenue guidance because of the weak dollar.

"I think there will be selected companies with a potential negative impact from the dollar, but the question is, is it a net negative and what is the underlying story," said Deutsche Bank's Weidenbach.

Overall fourth-quarter earnings for the STOXX 600 are expected to increase by 11.9 percent year on year, the latest Thomson Reuters data showed.